With no end in sight to the stalemate in Washington, global stock markets slid and investors sought out the safer havens of gold and some government bonds.

ENLARGE

Traders stressed that conditions across financial markets remained calm, and many investors said they were hopeful that the deadlock in Congress, which has led to the first partial federal government shutdown in 17 years, would end in time to avoid the Treasury Department failing to make payments on U.S. government debt.

But the uncertainty over how the political battle will play out was enough to send U.S. stocks to their 10th decline in the past 13 sessions. The Dow Jones Industrial Average fell 136.34 points, or 0.9%, to 14936.24, its lowest level in a month. The blue-chip index stands 4.7% below its record reached Sept. 18.

Markets in Europe and Asia also declined. The Stoxx Europe 600 fell 0.2% to close at its lowest level in a month amid the U.S. debt worries. Japan's Nikkei Stock Average shed 1.2% after falling 5% last week.

While investors expressed annoyance with the political brinkmanship, the main concern was the possibility that the U.S. will hit the federal debt ceiling and default.

"The odds of a default are very small, but the consequences wouldn't be pretty," said Bob Baur, chief global economist at Principal Global Investors, which manages $289.1 billion. Mr. Baur said he hasn't been making defensive moves and instead has been taking advantage of the market's recent weakness to buy stocks that will perform well in a strengthening economy.

But for the most part, investors expect the situation will be resolved without a default. "In spite of all the talk, they will come to an agreement and move on," said Margie Patel, senior portfolio manager with Wells Capital Management who manages $1.5 billion. "I'm not especially worried about it. People would like to see a bigger [pullback] so they can buy."

As they sift through the Washington mess, some money managers think it could be a blessing, at least for their investments. E.S. Browning joins MoneyBeat. Photo: Getty Images.

The S&P 500-stock index shed 14.38 points, or 0.9%, to 1676.12, its lowest close since Sept. 9. The Nasdaq Composite Index lost 37.38 points, or 1%, to 3770.38. Gold prices rose 1.2%, to settle at $1,324.80 a troy ounce.

Stocks opened sharply lower Monday on the heels of losses in overseas markets and a weekend that showed no apparent progress on the budget fight. Stock stabilized but turned back toward the lows of the day late in the session.

Activity was muted, as many investors have been holding back from making big portfolio changes, traders said. Total composite trading volume was the lowest since the Friday before the Labor Day holiday weekend and the ninth lowest full day this year.

In the bond market, however, there were more signs of nervousness about a default. The Treasury has pegged Oct. 17 as the date after which the government will be unable to borrow any new debt. By Oct. 31, the government could deplete all its available funds and face the risk of a technical default on bills or bonds that are due around the end of the month, according to J.P. Morgan Securities.

Yields on bills maturing in late October and early November surged last week, as some investors sold holdings out of worries of a Treasury default. The price of one-month bills maturing on Oct. 31 fell again Monday, with yields rising as high as 0.165%. In contrast, the yield on the three-month bill closed at 0.025%. Typically, Treasury bills with longer maturities have higher yields than shorter-dated securities.

But prices on longer-dated Treasury notes, seen as a haven in times of volatility despite the debt-ceiling concerns, rose. The 10-year Treasury yield slipped to 2.634% from 2.650% on Friday, as bond yields move inversely to prices.

"Even those who are seriously concerned about default think that any nonpayment by the Treasury will be short-lived," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott in Philadelphia.

Meanwhile, the dollar lost ground against the yen and Swiss franc, as demand rose for currencies seen as a haven.

In corporate news, BlackBerry rose 28 cents, or 3.6%, to $7.97, after reports surfaced that several technology companies are looking at the smartphone maker for a potential takeover.

I believe the record is 21 days obama is wrecking all the other records he needs this one too, he's got to get in and roll up his sleeves and work it out, but obama is sitting on the sidelines sucking his thumb, pure waste of humanity.

John Harwood was foaming at his mouth this morning condemning Republicans and defending Democrats and the President. Then NPR and Wessel chimed in. At least GosTeleRadio was under the threat of Gulag. These clowns do bootlicking out of conviction and devotion.

"Marketplace" was heartaching over effects of the shutdown's effect on housing: FHA, IRS, SS apparently "essential" -- no wonder that all this social engineering, moral hazard and the Fed lead to unbalances and bubbles.

Senator Markey's office told me today that the government will retroactively pay the furloughed workers because the members recognized that it was all their fault.

So if we are paying people (government employees) not to work using our tax dollars because it is all the fault of Congress, does that mean that the losses people take in the market because of the shutdown should also be funded by the government? i am interested, does Congress work for the federal employees or for the people of this nation and if for the people of this nation, why are they only protecting a small percentage of impacted people?

Stock market is disconnected from the real Economy, but built on DEBT/easy money , courtesy of Ben & Co!

Wealth in USA, for the past 10-30 years is built on DEBT/credit! Housing is just part of that mirage, which Fed wants to re-inflate, so that, so called 'wealth' effect will revive the sagging economy. But 90% of Stocks and Bonds are owned by top10% and nothing to do with the rest!

It is all about the DEBT and nothing but the DEBT build up both public and private!

Now the piper is at the door but most likely s/he will again' kick the can down' solution!

aside from defense, can't we just keep em shutdown until it becomes obvious that one has to be turned on again at which point we only restart enough of each department to maintain its basic functions, e.g., this would a great opportunity to cut the size of government by huge percentages and make some serious headway on that $17 trillion debt. Half the employees on furlough right now could disappear and never be missed

The federal shutdown and furlough of federal employees, even after allowing for the return of 300,000 Defense Department civilian employees to the payroll, should have a much bigger and quicker impact on decreasing the level of consumer spending and economic activity. The "sequester" starting this year which has taken about $7.3 Billion our of federal contribution to personal income, was managed by reducing the hours worked and compensation for federal workers. This is much less dramatic in terms of cutting personal spending than the total elimination of employment and a current paycheck for 550,000 people. A 15-20% cut in compensation is one thing. A total elimination of compensation is another story with much bigger negative effect.

Who decided to shutdown the government unless ObamaCare was overturned? Certainly not Democrats. And what does ObamaCare have to do with the budget? Nothing. And according to John McCain, 72% of American do not support the GOP on this issue. The real question is: who really thinks shutting down the government and not raising the debt ceiling - which will cause tremendous harm to America and Americans is a sane thing to do or that it will in any way help the Republican Party?

Come on WSJ the world is not panicking, the market is just adjusting a little, bottom IF it goes that low is14750 area, as for the shutdown the trash running this country will finally get it and off we go to the next crisis, and the nut behind the wheel can go play golf, or maybe he'll hire on with Google so he can finally say he had a real JOB !

The debate among Republicans is all about image - tone, appearance, perception - not about substance. On actual policy all of these people agree: it's a positive good that Americans be kept from obtaining health insurance, kept from obtaining living wage jobs, kept from exercising their right to vote, kept from receiving government assistance when needed, kept from exercising reproductive rights, kept from having gun purchases regulated. And the problem for Republicans is that they didn't learn their lesson from the last elections where Americans rebuffed their agenda by standing in line for hours to vote against Mitt. 2014 is right around the corner.

Why is Obama fiddling while the nation burns? Doesn't he understand the legacy slipping thru his fingers? Obama never explicitly rejected his own Deficit Reduction Commission . If the president can marshall his authority to promote Simpson-Bowles package thru Congress and sign it into law. While I never voted for him even I would have to admit yes he is a Great President. yuck yuck.

A nation under duress elects a president of ambiguous past and questionable qualifications - on "hope and change". He quickly uses the crisis and its hardship to push through the second most ambitious, according to NYT, "progressive" agenda since FDR. By 2010, Republicans (to approval of libertarians and conservatives in general) vowed to get rid of him and scale back damage that had been done to nation's economic health and its future. The nation dug in its hills and reelected the class warfare president and his "progressive" Senate. Economic woes continue and opposition, weak as might be, continues to fight. I believe it will lose badly and the country will quickly roll down "progressive" downhill.

The non-essentials are so important it was voted 407-0 by the House they should receive their back pay. For some reason someone spending a dollar in the public sector means more than a dollar being spent in the private sector. That is what this redistribution is all about.

The only logical conclusion is that those in the public sector can create service jobs for those in the private sector. With their excess money, they can go on vacations at the resorts. This will create jobs because someone will need to mix their drinks, make their bed and clean their room and prepare their food. Heck, even the baggage boy can get enough in tips to help his family have a decent meal and pay the bills.

James Lane wrote: "No Mr. Weir. Do you? If so, why do you consider that an "indication of a deeply divided nation."? I'll note that it happened three other times prior to the 2000 election."

Yes, I do. And I think that that should be self-evident. As for your point that it happened three times in the past in American history, thank you. I was not aware of that. However, the fact that it has happened in the past does not disprove my implied assertion, does it? I would simply say that those elections reflected a deeply divided electorate as well.

The ACA has quite a lot to do with the budget since it's part of it and is increasing it by a substantial amount and the country is already in debt many trillions of dollars and already has many, many more trillions of dollars in unfunded liabilities to the tune of about $117 trillion total. I couldn't care less what John McCain has to say about this-especially when he cites false statistics.

Maybe it's for the same reasons cited by Barack Obama when he stated the following: "The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

Why is John Boehner putting the full faith and credit of the USA on the ropes because of ObamaCare? Why should Obama negotiate - he already won the argument with the American people who voted for him in 2912. The minority does not rule the majority in America, and polls are running against Republicans. Turn off Fox.

How does a President being elected by the Electoral College but losing the popular vote indicate a "deeply divided nation." I'm seriously trying to understand your logic here. What it indicates to me is a close election, but that is not necessarily indicative of a deep divide. To read your statements it is a priori. In my opinion, that just isn't the case.

You give yourself too much credit for "likes". Rightwingers giving themselves "likes" in a rightwing echo chamber is meaningless. It makes you think there are more people that think like you than there actually are.

The 2012 election would be a good example of that. "Mitt in a landslide".

Maybe because he is "Commander in Chief". Presidents negotiate and lead. Obama wants to demonize and blame. He must be a complete embarrassment for the Democrats. Truth be known, they are all walking on eggshells. Whenever one of them are afforded an opportunity, they resign. One exception, Eric Holder, Obama can always count on him.

Nancy, Tim dispenses the most imbecile, racially charged and uninformative posts - "wryly" is not it. If you don't like my posts, you may pass them over and go straight to Paula's, who is known for giving multiple "recommendations" to herself and those who toe the party line - you may find her posts more palatable and informative. Best, Cato.

You're not helping yourself by being so defiantly unpleasant, Cato. Timothy has wryly observed that right and left have exactly mirror views of the situation. There was nothing nasty, disrespectful or combative about that observation. In fact, we can probably all agree Timothy is right. It just didn't call for your response.

The WSJ forums already have plenty of trolls, kooks and truly unpleasant people. You don't need to add to the count every chance you get.

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